Why U.S. gig economy workers need an act of Congress to get jobless pay

U.S. gig economy workers such as Uber and app-based delivery drivers would be allowed to claim unemployment benefits under a $2 trillion package, but how those benefits will be distributed is not clear.

Until now, people who work as contractors for platforms such as Uber have not had access to unemployment benefits reserved for full-time employees of traditional businesses.

Here is a look at the situation of gig economy workers and the obstacles they face to receive unemployment pay.

Why are U.S. gig workers generally not entitled to unemployment benefits?

Most government safety net benefits including health insurance, sick pay, workers’ compensation and unemployment insurance are attached to an employment relationship, said Pauline Kim, an employment law professor at Washington University in St. Louis.

Companies including Uber Technologies Inc, Lyft Inc, GrubHub Inc, DoorDash Inc and Postmates save money by not paying costly benefits and offloading some of the traditional employer-side responsibilities on to workers the platforms classify as independent contractors.

The companies say many workers use their services to supplement income from other full or part-time jobs that offer benefits and cherish the flexibility that comes with being a contractor.

What obstacles must gig workers overcome to receive unemployment pay under current law?

State authorities use data on wages submitted by employers to calculate unemployment pay. Gig economy companies do not report that information, making it difficult for drivers to claim unemployment benefits.

Some drivers in California and New York have filed for jobless pay regardless, arguing they have been misclassified as contractors.

If the worker is deemed misclassified, the state can demand reimbursement from the company. But local officials make case-by-case determinations that are not binding for other applicants, said Veena Dubal an employment law professor at the University of California Hastings.

What is changing with the federal coronavirus bill?

Under the Coronavirus Relief Bill, contractors and self-employed workers are included for unemployment benefits if they can show they have been affected by COVID-19.

The requirements are defined broadly and should allow nearly every gig worker to claim benefits, said Bryan Lazarski, a labor and employment lawyer.

The program offers up to 39 weeks of benefits based on the most recent tax return, with per-week payout levels depending on the state of the worker. Workers receive an additional $600 per week for up to four months.

What documents do gig workers have to submit?

It is still unclear what paperwork they will need to submit. The U.S. Department of Labor is expected to issue guidelines soon, said Susan Houseman, vice president at the Upjohn Institute for Employment Research.

The coronavirus package refers to laws invoked during natural disasters. Under those laws, some states allow self-employed workers to submit check stubs, bank statements, work orders and affidavits as proof of income, Houseman said.

Does the federal bill change anything about gig workers’ status?

The bill is limited to the current coronavirus crisis and the year 2020. It does not include reforms of the current unemployment system.